Facts of the Case :
The present case is related to search & seizure action carried out in case of Sh. S.K. Gupta (‘third party’) in respect of companies and other business entities which were controlled by him or owned by him or different individuals connected with him. The assessee was one such individual. During the assessment proceedings u/s 143(3) read with section 153A, AO not being satisfied with the explanations made by the assessee and based on extract of some hand written ledgers indicating name “Shri Anil Khandelwal’ seized from Sh. S.K. Gupta, made addition to the income of the assessee during A.Y. 2006-07 and A.Y. 2007-08.
Assessee filed the appeal before CIT(A) and contented that despite a simultaneous search operation carried in the case of assessee, no evidence whatsoever has been found which correlates with the impugned seized documents found from the premises of Shri S. K. Gupta, a third party. He also took the ground that Shri S. K. Gupta himself had denied the authorship/ownership of the impugned documents during his statement on 13/12/2006 and reiterated the same even during his cross examination by the appellant before the AO on 05/04/2012. Considering the submissions of the assessee and the statement of Shri S.K. Gupta specifically with respect to the entries which were attributed to the assessee, CIT(A) accepted the contention and directed for deletion of said addition. The revenue appeal was also rejected by the ITAT based on the reasoning of the CIT(A) as well as various Supreme Court decisions relevant to the present case. Aggrieved Revenue filed the appeal before Hon’ble High Court.
The question ‘whether the inference drawn on the basis of the material seized was sustainable?’ was answered in favour of the assessee having regard to the below mentioned factual nature of the dispute and having examined the findings of the lower authorities on this account which was not considered unreasonable, Hon’ble Court hold that no substantial question of law arises for consideration. The appeals are devoid of merit and are consequently dismissed.
Factual Findings and decisions relied upon
- During cross-examination, Sh. S.K. Gupta denied of any such receipt or payment of money shown in the annexure. In response to question nos.13 and 14, Shri S.K. Gupta stated that he did not know “about these rough books and how they are lying in my office premises”. He further stated that “these books may be rough entries of daily entries as shown to me in detail of our group companies and enter transfer and deposits”. In his cross examination on 5.4.2011, he denied the authorship of Annexure A-5 which specifically stated that he had not given or taken cash from the assessee and his office. He claimed to know two or three other individuals bearing the name of the assessee, i.e., Shri Anil Khandelwal who belongs to his native place. Furthermore, he claimed that he never received or paid any cash to the assessee or those connected with him.
- The assessee in both the years filed a paper books running into 71 pages and 87 pages respectively which have not been considered anywhere.
- Revenue has not filed any cogent argument before ITAT to show that view taken by CIT(A) was incorrect.
- Presumption u/s 134(4A)/292C is available only in the case of the person from whose possession and control the documents are found and it is not available in respect of a third party.
- It is well settled in law that the loose papers, diaries and documents cannot possible be construed as books of account regularly kept in the course of business. Such evidence would, therefore, be outside the purview of Section 34 of the Evidence Act, 1972
Case laws relied
- Hon’ble Bombay High Court case of ACIT vs Lata Mangeshkar (1973) 97 ITR 696 (Bom.)
- DCIT vs Yashpal Narendra Kumar in ITA NO-5340 to 5342/De1/2012
- Central Bureau of Investigation vs. V.C.Shukla (1988) 8 SSC 410
- Chuharmal vs. Commissioner of Income Tax (1988) 172 250/138 Taxman 190 (SC).